By A. Vince Colella
Lawyers who engage in the practice of representing victims of automobile accidents recognize that written notice must be provided to the appropriate insurer within one year of the date of loss. Auto insurance carriers are also keenly aware of this requirement, although the victims and their medical providers may not. Written notice is typically accomplished by completing a standard form application for benefits either provided by the injured party's carrier or a template created by the law firm. However, trends in no-fault law have spurred a cottage industry of medical provider lawsuits initially by way of assignment and, more recently, by statute [MCL 500.3112]. Consequently, healthcare facilities must follow the same reporting requirements applicable to their patient/insureds. This can present challenges for the medical provider where the injured party does not retain counsel and submit proper written notice within the one-year limitations period. Until recently, verbal notice of a claim was insufficient to meet the requirements of MCL 500.3145.
However, a novel decision by the Michigan Court of Appeals has substantially relaxed the reporting requirements. In Shah v. State Farm Mut. Auto. Ins. Co., 2020 Mich. App. LEXIS 7271 (Ct. App. Oct. 29, 2020), the Defendant's insured reported a property loss claim within days of her motor vehicle accident, but did not report she was injured. While speaking with a claim representative in the defendant's property damage department, the insured mentioned "neck pain." The adjuster made a note in the file stating "this is for PIP only." A copy of the traffic crash report was ordered by the adjuster and placed into the file. The PIP department made several attempts to follow up with the insured, including sending an application for benefits, which was never completed or returned. Nearly two years after the accident, the insured first sought medical treatment for injuries allegedly caused by the accident. An assignment was executed in favor of her physician authorizing the collection of no-fault benefits directly from the defendant for health care services. Subsequently, the physician brought suit to recover payment of said services.
The defendant moved for summary disposition claiming, in part, that the insured failed to provide proper notice in the time and manner required by MCL 500.3145. Plaintiff countered the motion by arguing that the notes prepared by the property adjuster, together with a copy of the police report, constituted sufficient written notice because the information taken as a whole identified the key components of the claim: injury, time, location and date of loss. Moreover, plaintiff asserted that defendant conducted its business solely by telephone thereby had waived or was estopped from arguing that a written application for benefits was required.
The trial court ruled that plaintiffs - as the legal assignees of the insured - were subject to the same defenses available to the defendant in the underlying claim. More specifically, the trial court held the claim was barred because neither the insured nor someone acting on her behalf provided written notice of her claim for PIP benefits as required under the statute. However, the Court of Appeals disagreed. In reaching its decision, the court emphasized the importance of determining whether the statute plainly and unambiguously expresses the legislative intent. Unquestionably, the plain language of MCL 500.3145(1) merely requires the (a) name of the injured person, (b) time, (c) place and (d) nature of his injury. In reaching its opinion in favor of the plaintiff, the court focused on the initial telephone call between the insured and her property loss adjuster, coupled with the fact the adjuster entered the critical information pertaining to the claim into the on-screen report and routed the report to the defendant's PIP department. Ultimately, the case likely turned on the fact that the defendant did not dispute that it lacked any of the statutorily required information.
The Shah analysis may pave the way for similar cases and serve as the basis to challenge 'notice' defenses under other statutes, (i.e., dram shop claims or personal injury actions against the State of Michigan and/or its employees), where courts have consistently favored strict adherence to written notice mandates. However, while this panel has seemingly relaxed the requirements of MCL 500.3145, practitioners should continue to error on the side of caution. Notice provisions under Michigan jurisprudence have long served as a basis to deny and dismiss claims for noncompliance. Courts have been reticent to deviate from strict statutory requirements even in cases where actual notice had been given but not in the form required by law. See McCahan v Brennan, 492 Mich 730 (2012). Therefore, the reasonable and common-sense approach taken by the Shah panel, while encouraging, may not trend in favor of excusing the failure to provide written notice of a claim.
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Vince Colella is a founding partner of personal injury and civil rights law firm Moss & Colella.
